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Re-election Strategy Is Tied to a Shift on Smog

Smog covering downtown Los Angeles. The Obama administration has delayed two major clean air rules as the White House sharpens its focus on the president's re-election.Credit
Nick Ut/Associated Press

WASHINGTON — The summons from the president came without warning the Thursday before Labor Day. As she was driven the four blocks to the White House, Lisa P. Jackson, the administrator of the Environmental Protection Agency, suspected that the news would not be good. What she did not see coming was a rare public rebuke the president was about to deliver by rejecting her proposal to tighten the national standard for smog.

The half-hour meeting in the Oval Office was not a negotiation; the president had decided against ratcheting up the ozone rule because of the cost and the uncertainty it would impose on industry and local governments. He clearly understood the scientific, legal and political implications. He told Ms. Jackson that she would have an opportunity to revisit the Clean Air Act standard in 2013 — if they were still in office. We are just not going to do this now, he said.

The White House announced the decision the next morning, infuriating environmental and public health advocates. They called it a bald surrender to business pressure, an act of political pandering and, most galling, a cold-blooded betrayal of a loyal constituency.

“This was the worst thing a Democratic president had ever done on our issues,” said Gene Karpinski, president of the League of Conservation Voters. “Period.”

The full retreat on the smog standard was the first and most important environmental decision of the presidential campaign season that is now fully under way. An examination of that decision, based on interviews with lobbyists on both sides, former officials and policy makers at the upper reaches of the White House and the E.P.A., illustrates the new calculus on political and policy shifts as the White House sharpens its focus on the president’s re-election.

Photo

Lisa Jackson, the administrator of the Environmental Protection Agencey, right, listened to President Obama speak in September.Credit
Charles Dharapak/Associated Press

Industry groups and their Republican allies praised the move, which leaves a far more lenient ozone rule in place for at least a year. But then they reeled off a dozen other proposed environmental, labor and health regulations they also wanted killed.

In the weeks since that decision, the administration has made a number of other environmental decisions, sending mixed messages that left both environmentalists and industry lobbyists perplexed.

Two major clean air rules have been delayed, at least temporarily. The Interior Department announced a significant expansion of offshore drilling in the Arctic and the Gulf of Mexico over the next five years. Last week, the administration bowed to pressure from protesters, environmental groups, and residents and officials in Nebraska in announcing that it would delay a decision on the bitterly contested Keystone XL oil pipeline until after the 2012 election. Taken together, the moves mark the White House’s growing awareness of the costs of environmental regulation in a battered economy.

The ozone decision pitted Ms. Jackson, a Princeton-trained chemical engineer and self-described “New Orleans girl,” against the White House chief of staff, William M. Daley, a son and brother of bare-knuckled Chicago mayors who was brought in to help repair relations with business and Congress. It also shows the clout of Cass R. Sunstein, the legal powerhouse who serves, mostly behind the scenes, as the president’s regulatory czar with the mission of keeping the costs of regulation under control.

While Mr. Daley has recently given up some responsibilities at the White House, he remains the administration’s conduit for business interests.

The ozone decision was jarring because it was wholly unexpected. Ms. Jackson considered resigning but soon abandoned the idea as a futile gesture.

Many of the president’s supporters remain unsettled, fearing that the ozone decision meant he was abandoning environmental issues. But White House officials cite two major vehicle emissions rules, the pipeline delay and the president’s stated promise to carry through on other clean air measures as evidence of the administration’s devotion to their causes.

Revisiting a Law

In his inaugural address, Mr. Obama promised to “restore science to its rightful place” in making government environmental policy. He also pledged to revisit environmental rules set by the administration of George W. Bush that his administration felt were too weak.

The standard for ozone was last set in 2008 by the Bush administration at a level of 75 parts per billion, above the range of 60 to 70 recommended by the E.P.A.’s scientific advisory panel at the time, but never enacted. Environmental and public health groups challenged the Bush standard in court, saying it would endanger human health and had been tainted by political interference. Smog levels have declined sharply over the last 40 years, but each incremental improvement comes at a significant cost to business and government.

So Ms. Jackson asked health and environmental groups to hold their lawsuit in abeyance while she reconsidered the ozone standard, a job she expected to complete by the summer of 2010. Until then, an outdated ozone standard of 84 parts per billion, set by the E.P.A. of the Bill Clinton administration in 1997, remained the law.

Delay followed delay until the spring of this year, when Ms. Jackson determined that the standard should be set at 65 parts per billion to meet the Clean Air Act’s requirement that it be protective of public health “with an adequate margin of safety.” At 65 parts per billion, the agency calculated, as many as 7,200 deaths, 11,000 emergency room visits and 38,000 acute cases of asthma would be avoided each year.

Ms. Jackson knew that standard would cause political heartburn at the White House, so before submitting it she met with Mr. Daley at least three times in June to try to deal with any concerns. Mr. Daley, rightly sensing the uproar from business and local governments at the cost of meeting such a standard, sharply questioned the costs and burdens as well as the timing of the new rule but never explicitly asked her to hold off or pull back.

Ms. Jackson went back to her suite in a large office complex off Pennsylvania Avenue to huddle with aides and tweak the proposal.

She returned to Mr. Daley with a compromise, agreeing to settle for a somewhat weaker standard, at the upper limit of the recommendations of the E.P.A.’s scientific advisory board, as well as measures to provide significant flexibility in compliance.

Ms. Jackson thought she had a deal. In early July she sent the White House a 500-page package with a detailed cost-benefit analysis for what she assumed would be routine vetting and approval.

“We were absolutely, 100-percent certain we were going to get this ozone rule,” one senior E.P.A. official said.

The business community and its Republican allies in Congress went to war.

The ozone rule became a symbol of what opponents called a “regulatory jihad” and brought out a swarm of industry lobbyists and Republicans in Congress who identified it as one of their top targets. They organized letter-writing campaigns, ran ads in journals seen by Washington policy makers and put the ozone rule at the top of the list of administration environmental initiatives they wanted repealed in the fall. They claimed the rule would cost $90 billion a year — far above E.P.A.’s estimates — and put much of the industrial heartland out of business. Local and state officials complained to Congress and the White House that they lacked the resources to enforce the new rule. Even some Democratic lawmakers warned the White House that the regulation would damage their re-election prospects.

Against all this, there was no one lobbying strongly within the White House for the tougher standard. Carol M. Browner, a former E.P.A. administrator who had served as the White House coordinator for energy and environmental policy, left earlier this year as Mr. Daley was taking over because she sensed those issues were taking a back seat to economic and political concerns.

Mr. Daley abolished her job, leaving no one in the current White House who speaks as forcefully on environmental issues as she did.

Another Voice

In charge of Mr. Obama’s effort to reduce regulatory costs and burdens was Mr. Sunstein, on leave from teaching at Harvard and a onetime colleague of Mr. Obama’s at the University of Chicago Law School. One of the most respected liberal legal scholars of his generation, he is known for his at-times unconventional thinking on regulation and economic behavior.

Mr. Sunstein had his pick of jobs in the new administration. He chose the obscure regulatory affairs office as a potential laboratory for his sometimes iconoclastic views. He has challenged the utility of command-and-control-style federal regulation and has written favorably of programs to “name and shame” polluters as a way of getting them to clean up their operations without enforcement actions or fines. He has sought creative ways to encourage responsible economic and environmental behavior without using the heavy hand of the state.

Mr. Sunstein never really warmed to the proposed ozone rule, not least because it would, by law, be subject to revision again in 2013. He also noted that in nearly half of the E.P.A.’s own case studies, the cost of the new rule would outweigh the benefits, raising additional alarms.

One outside adviser, who watched the process closely but declined to be identified for fear of losing access to policy makers, said the ozone rule provided the perfect opportunity for Mr. Sunstein to make his mark.

“Cass was itching, itching, itching to send a return letter,” the adviser said.

Early Objections

Although she was under intense pressure from business and Congressional Republicans over the proposed rule, Ms. Jackson believed the White House would back her. In mid-July, she hosted a delegation of trade group officials at E.P.A. headquarters so they could present their concerns. Among those present were leaders of the U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable and the American Petroleum Institute.

They tried a hard sell, according to R. Bruce Josten, the chief lobbyist for the Chamber of Commerce, noting that the new rule would push hundreds of counties out of compliance with the Clean Air Act and force them to devise costly new air pollution control plans. They suggested she wait until the next review in 2013.

“Lisa is very smart, cordial, friendly,” Mr. Josten said of Ms. Jackson. “She listened to us, but then talked about how important it was to do this, the lung thing, the asthma thing, the kids’ health thing. She felt it was important to go ahead.”

Mr. Josten added: “The funny thing was nobody wanted to come right out and say, ‘Are you guys thinking this through? Your boss is up for re-election next year, do you really want to shut down industrial permitting? You’re going to have a major negative impact on the economy.’ ”

The executives left frustrated. Ms. Jackson knew their efforts were just beginning.

Maneuvering

The business lobbyists started working the White House, securing a series of meetings with mid-level staff members in July. Mr. Daley and Mr. Sunstein agreed to meet with them on Aug. 16, the same day they were to meet with public health and environmental groups.

For the West Wing gathering that day, Jack N. Gerard, the pugnacious head of the American Petroleum Institute, brought maps showing the areas that would be out of compliance with the proposed regulation in a vivid swath of red states across the Midwest and along the East Coast, states that Mr. Obama won in 2008. They did not need to spell out the implications.

“The maps were on the table,” said Khary Cauthen, director of federal relations for the petroleum group and a White House environmental adviser in the Bush administration. “One of the C.E.O.’s had a whole spiel he was going to do, ‘This is so bad here, so bad there,’ but Daley shut him up. He was like, ‘I got that.’ ”

John Engler, the former Republican governor of Michigan and president of the Business Roundtable, noted the burden to state and local officials. “I told him, ‘When there’s a cloud over your head about whether you’re going to be able to meet the new standard, you’re likely to lose new business to some other state,’ ” Mr. Engler said, referring to Mr. Daley.

Mr. Daley was well aware of state and local concerns. One of the strongest appeals came from North Carolina, a state Mr. Obama narrowly won in 2008. The state’s governor, Bev Perdue, a Democrat, argued against the new ozone rule. Her air quality director, B. Keith Overcash, wrote the E.P.A. pleading for a delay. “Lack of employment, loss of health care, and in some cases, loss of a home, also affect the health of our citizens,” he said.

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The decision showed the clout of Cass R. Sunstein.Credit
Richard Perry/The New York Times

“The governors had a big role,” Mr. Engler said. “They were very helpful.”

A few hours later, the other side gathered around the same table in the Roosevelt Room. Mr. Daley, Mr. Sunstein and Gina McCarthy, the top clean air official at the E.P.A., sat at the table; a half-dozen more junior aides lined the walls.

Charles D. Connor, president of the American Lung Association and a childhood friend of Mr. Daley’s, opened by discussing the adverse health impacts of ozone. He introduced Monica Kraft, a pulmonologist at Duke University and the president-elect of the American Thoracic Society.

“I told them that we thought a 70 p.p.b. standard was appropriate for health reasons and laid out the statistics on deaths associated with progressively higher levels of ozone,” Dr. Kraft said. She emphasized the damage smog does to the lungs of even healthy young children.

Mr. Daley listened politely, then asked, “What are the health impacts of unemployment?” It was a question straight out of the industry playbook.

Another member of the group introduced polling data showing strong public support for tougher air rules. Mr. Daley cut him off with an expletive, saying he was not interested in polls.

Daniel J. Weiss of the Center for American Progress presented data showing little difference in employment and economic growth in areas required to adopt stricter ozone standards than those that did not. Mr. Daley nodded but said nothing.

As the meeting was breaking up, Mr. Daley said, “As you know, it’s a very difficult economic time.”

Still, the group left believing that the rule would go forward.

The Decision

The timing turned out to be terrible. The White House was locked in an ugly battle with Republicans over raising the debt ceiling, job creation had stalled and the presidential campaign was already under way with a singular focus on Mr. Obama’s stewardship of the foundering economy. The president was preparing a speech on job creation to a joint session of Congress even as he was considering a regulation that many — including governors of politically pivotal states like North Carolina and Ohio — warned could cost thousands of jobs.

For the next two weeks, none of the parties, including the E.P.A. leadership, heard anything from the White House about ozone. Mr. Obama returned to Washington from vacation near the end of August with a heavy menu of economic decisions before him. He wanted the ozone matter behind him and called Ms. Jackson into his office on Sept. 1 to break the news.

“There was always a notion that they were looking for a regulation to use as an example of the reform initiative, a poster child, and this was potentially it,” said a senior E.P.A. official who asked not to be identified on a matter involving discussions with the White House. “We knew one was coming. We just didn’t know which one.”

Since Mr. Obama took office, Mr. Sunstein’s agency has reviewed more than 1,800 rules. Most were approved with some changes and set into law. About 130, including 11 from the E.P.A., were voluntarily and quietly pulled back for further work.

Only one — the ozone standard — was so publicly rejected.

Mr. Sunstein would not discuss his communications with the president, but Mr. Obama is known to prefer concisely written memos to long oral briefings. The president’s brief public statement turning back the proposed ozone rule closely mirrored Mr. Sunstein’s letter to Ms. Jackson.

In an interview, Mr. Sunstein said the rejection of the rule resulted from a long and detailed analysis.

“This decision was made on the merits and not on politics,” he said. “There isn’t an agreement to do things until the process runs its course. There is sometimes a surprise.”

In a letter rejecting her standard, he reminded Ms. Jackson of the president’s executive order in January that all proposed regulations “must promote predictability and reduce uncertainty.”

Although Mr. Sunstein was not present in the Oval Office when Mr. Obama delivered the news to Ms. Jackson, Mr. Daley was there, but stayed mostly silent.

A version of this article appears in print on November 17, 2011, on page A1 of the New York edition with the headline: Re-election Strategy Is Tied to a Shift on Smog. Order Reprints|Today's Paper|Subscribe